A former Coinbase product manager and his brother, along with a Houston man, were charged Thursday (US time) in what US federal authorities described as the country's first cryptocurrency insider trading case.
Brothers Ishan Wahi and Nikhil Wahi were arrested while the Houston man, Sameer Ramani, remained at large, federal authorities said.
According to a release Ishan Wahi, 32, former product manager at Coinbase Global Inc., one of the world's largest cryptocurrency exchanges provided tips to Nikhil Wahi, 26, and their friend, Ramani, 33.
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All three were charged with wire fraud conspiracy and wire fraud.
The indictment said Ishan Wahi was stopped by law enforcement before boarding a May 16 flight to India and was prevented from leaving the country.
In the hours before the flight, he had telephoned and sent texts to his brother and Ramani to alert them about an investigation initiated by Coinbase.
Ishan Wahi bought a one-way airline ticket to India in an “unsuccessful attempt to flee from the United States” after agreeing to be interviewed for an internal probe, the indictment said.
US Attorney Damian Williams said the prosecution represents the government's first insider trading case involving cryptocurrency, a reminder that the blockchain markets are not a law-free zone.
Michael Driscoll, head of the FBI’s New York office, said the defendants collected about $1.5 million in illegal profits by trading in at least 25 different crypto assets.
Attorneys representing Ishan Wahi said that their client is innocent and “intends to defend himself vigorously against these charges and in the SEC action.”
The Securities and Exchange Commission said the charges were brought against the trio after they carried out a scheme to trade ahead of multiple announcements regarding certain crypto assets that were going to be made available for trading on the Coinbase platform.
"As today’s case demonstrates, whether in equities, options, crypto assets, or other securities, we will vindicate our mission by identifying and combatting insider trading in securities wherever we see it,” said Carolyn Welshhans, Acting Chief of the Enforcement Division’s Crypto Assets and Cyber Unit.
The New York indictment said Ishan Wahi began working as a product manager on the asset listing team in October 2020 and provided tips about confidential information to his brother and friend from June 2021 until this past April.
Brian Armstrong, the chief executive of Coinbase, said that the company gathered sufficient evidence and then fired Ishan Wahi and forwarded its findings about the three men to the Justice Department.
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